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FINAL REPORT MARCH 2010 AMAJUBA DISTRICT MUNICIPALITY BUDGET 2010/2011.

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Presentation on theme: "FINAL REPORT MARCH 2010 AMAJUBA DISTRICT MUNICIPALITY BUDGET 2010/2011."— Presentation transcript:

1 FINAL REPORT MARCH 2010 AMAJUBA DISTRICT MUNICIPALITY BUDGET 2010/2011

2 This presentation is designed to provide a general overview of the Municipality’s finances and to demonstrate the Municipality’s accountability for the money it receives. The 2010/11 MTREF Budget has been prepared in compliance with the MFMA. This is a financial plan as informed by the municipality’s strategic plan (IDP) in order to ensure service delivery to the community that will enable the municipality to meet its operational and strategic objectives for the 2010/11 MTREF period. BACKGROUND

3 In view of its strategic priorities the Amajuba District followed a program of reconstruction and development that included: the provision of basic services; the progressive redressing of backlogs in infrastructure; job creation; and the enhancement of service delivery and financial management capacity. The 2010/11 medium-term budget sought to address development and transformation challenges by deliberately and Purposefully directing resources to the key priorities of the Municipalities. This included additional resources for economic development, safety and security and service delivery. Financial sustainability and viability remained the key principles and, to ensure compliance with the Municipal Finance Management Act The Municipality, having played a leading role in piloting the implementation of the National Treasury Financial Management Reforms, is proud of the continued implementation and roll-out of reforms and of the key developments and shifts that have taken place in financial management in the last two financial years.

4 The Integrated Development Plan recognizes that the development and implementation of the various financial planning reforms(e.g. MFMA, GAMAP/GRAP and National Treasury financial reforms will fundamentally change the approach adopted in terms of financial planning. An integrated approach when appropriating resources has become essential for sustainable outcomes, especially taking into consideration the size of the Municipalities and the diverse challenges it faces. The Integrated Development Plan was based on various factors and financial variables which ultimately influence the budget and the financial performance of the Municipalities. The following are the major factors that have been taken into consideration and that primarily determine the financial approach: Employee-related costs Debt recovery Tariff increases Cost increases Borrowing levels Asset management

5 CHALLENGES SUCCESSFULLY ADDRESSED DURING 2008/09 IMPLEMENTATION OF GENERALLY ACCEPTED MUNICIPAL ACCOUNTING PRACTICE/GENERALLY RECOGNISED ACCOUNTING PRACTICE (GAMAP/GRAP) Although the 2007/08 financial statements had already been compiled according to GAMAP/GRAP, the 2008/09 financial statements were further improved to comply with the latest specimen financial statements issued by National Treasury. CURRENT CHALLENGES The Amajuba District is faced with the following constraining factors which impedes its ability to expand: - High levels of poverty and unemployment resulting in high service demands. Capital spending pressures to eradicate infrastructure backlogs. High level of deferred maintenance, coupled with inadequate spending on existing maintenance. Scarcity of technical staff which has an impact on infrastructure development and maintenance of assets.

6 THE PRIORITIES OF THE MUNICIPALITY FOR 2010/11 ARE: Managing and developing our infrastructure Developing our economy Ensuring community safety Building and sustaining our communities Developing and enhancing our natural resources Building our institution and governing well Enhancing the image of the District

7 THE PRIORITIES OF THE MUNICIPALITY FOR 2010/11 ARE TABLE 9 RECONCILLATION OF IDP & BUDGET -OPEX Medium Term Revenue and Expenditure Framework Adjustment Budget Budget Year +2 Budget Year /112011/122012/13 REVENUE BY SOURCE Intergrated Service Delivery 54,324,765 66,031,47470,123,849 Social Facilitation23,995,63725,146,63026,630,281 Institutional & Governance60,829,17743,613,37049,286,725 Enviromental Management1,000,0001,059,0001,121,481 Municipal Planning17,711,80718,756,80419,863,455 Economic Development1,140,0001,207,2601,278,488 TOTAL OPERATING REVENUE 159,001, ,814, ,304,

8 THE PRIORITIES OF THE MUNICIPALITY FOR 2010/11 ARE:OPERATING AND CAPITAL BUDGET

9 BUDGET ASSUMPTIONS /PARAMETERS 2010/11 The budget assumptions/parameters have been amended taking into account the parameters and guidelines from uThukela Water and National Treasury (Refer Circular No.51 of the MFMA dated 19 February 2010) Description2009/ / / /2013 NT Guidelines3%-6% CPIX5.4%5.7%6.2%5.9% Salaries6.7%7.2%8.2%8.3% Free Basic Water 6 kl p.m Equitable Share Allocation 66,487, ,331, ,968, ,266,000.00

10 REVIEW OF OPERATING RESULTS Figures with regard to the 2010/11 MTREF budget are included in this report. A graphic presentation of the Operating and Capital budgets is shown below. SUMMARY OF OPERATING AND CAPITAL BUDGET VS EXPENDITURE DRAFT OPERATING AND CAPITAL BUDGET 2010/ / /2013 CAPITAL BUDGET45,228, ,398, ,922, OPERATING BUDGET 113,773, ,416, ,382, TOTAL BUDGET 159,001, ,814, ,304,279.00

11 REVIEW OF OPERATING RESULTS Figures with regard to the 2010/11 MTREF budget are included in this report. A graphic presentation of the operating budgets is shown below. SUMMARY OF OPERATING INCOME AND EXPENDITURE DRAFT OPERATING AND CAPITAL BUDGET INCOMEEXPENDITURE SURPLUS /DEFICIT 2009/ ,922, / ,773, / ,416, / ,382,279 0

12 REVIEW OF OPERATING RESULTS The graph below indicates the breakdown of Budgets for the 2009/2010, 2010/2011,2011/2012 and 2012/2013

13 REVIEW OF OPERATING RESULTS The graph below indicates the breakdown of Budgets for the 2009/2010, 2010/2011,2011/2012 and 2012/2013 ACTUAL BUDGET YEAR ADJUSTMENT BUDGET YEAR BUDGET YEAR 2008/ / /2011 % increase OPERATING EXPENDITURE BY TYPE Salaries, Wages & Allowances 21,072,677 28,675,699 29,248,101 33,763, % Renumeration of Councillors 2,689,502 3,722,021 4,429, % Depreciation 2,631,812 1,615,000 1,265,000 1,317, % Repairs & Maintenance 1,481,494 2,250,858 2,727,991 1,946, % Capital Costs-External Interest - 32, % General Costs 95,808,721 70,526,883 91,062,726 71,966, % Contributions to capital % Contributions to funds 1,680,717 1,100, , % TOTAL OPERATING EXPENDITURE BY VOTE 125,364, ,922, ,115, ,773,3865%

14 OPERATING EXPENDITURE 2010/2011 The graph below indicates the breakdown per main expenditure group.

15 OPERATING EXPENDITURE 2010/2011 The breakdown of expenditure per Department. Medium Term Revenue and Expenditure Framework Description Budget YearBudget Year +1Budget Year /112011/122012/13 OPERATING EXPENDITURE BY VOTE Executive and Council34,990,39416,684,96220,769,541 Office of the Municipal Manager9,183,2389,289,1369,837,195 Corporate Services7,677,9958,132,0478,611,838 Community Services12,486,31713,223,01014,003,167 Financial Services8,977,5499,507,22510,068,151 Technical Services9,096,7659,633,47410,201,849 Thusong Service Centre1,510,0391,334,3811,413,110 Development and Planning18,851,80719,964,06421,141,944 Disaster Management Centre10,999,28111,648,23912,335,485 Uthukela Water Pty -Entity--- TOTAL OPERATING EXPENDITURE BY VOTE 113,773,386 99,416,537108,382,279

16 OPERATING EXPENDITURE 2010/2011 The breakdown of expenditure per Department.

17 OPERATING EXPENDITURE 2010/2011 The breakdown of Prioritized Projects included in General Expenditure Budget Year 2010/2011 Sports & Recreation; 3,075,260 WSP Agreement -Uthukela Water 29,659,386 Senior Citizens Programme; 160,000 Experience Training; 50,000 OHS Admin; 5,000 Disabled Programmes; 450,000 Placement of Health Servic 1,000,000 Poverty Alleviation; 1,000,000 HIV/AIDS Plan Implementati 1,000,000 Environment Plan Review; 350,000 Environment Awareness; 100,000 Cemetry Implementation; 200,000 Annual Report; 200,000 Youth; 500,000 Gender & Children; 700,000 IDP Review Support Grant; 50,000 PMS Management & Review; 500,000 Arts & Culture; 1,400,000 Emergency Water Supplies; 800,000 Marketing & Corporate Imag 986,627 Tourism Shows & Exibitions 70,000 Gijima Manufacturing Plan; 100,000 ADM Tourism Project Suppor 550,000

18 OPERATING EXPENDITURE 2010/2011 The breakdown of Prioritized Projects included in General Expenditure Budget Year 2010/2011 Develop Inform System Supp 750,000 CTO Support; 250,000 Amajuba Tourism Marketing; 400,000 LED Project Support; 1,000,000 GIS Implementation; 140,000 Disaster Management Centre 2,000,000 Disaster Manage Capacity B 450,000 Disaster Management Implem 200,000 Fire Fighting Services; 800,000 LED Manufacturing Strategic Project Support 1,000,000 LED Agricultural Strategic Proj Support 1,000,000 Budget & IDP Roadshows-Strategic Support 650,000 Growth & Development Summit 200,000 Project Initiation Fund 1,000,000 Town Planning Support 1,000,000 Employee Wellness Programme 90,000 Disaster Relief interventions 4,200,000 SubTotal 58,036,273

19 BUDGET YEAR 2009/ /2011 % increase Officials Remuneration28,675,69933,763,37830% Renumeration of Councillors3,722,0214,429,6024% TOTAL OPERATING EXPENDITURE 107,922,461113,773,38634% REMUNERATION The actual expenditure on remuneration expressed as a percentage of the total expenditure.According to National Treasury a benchmark of less than 35% is acceptable. Given the current economic climate, the municipality remains cautious when it comes to increasing salary budgets.The Salga collective agreement negotiated for the 2010/2011 an across the board increase based on the average CPI percentage plus one and a half(1.5%) percent.We have provided for a 10.5% increase, this will be adjusted on finalization of the budget.

20 GOVERNMENT GRANTS AND SUBSIDIES The following table and graph show the amounts receivable in terms of contributions from the National & Provincial and Local government, which amounts have been included in the total revenue: BUDGET YEAR 2010/ / /2013 LOCAL GOVERNMENT FINANCIAL MANAGEMENT GRANT1,000,0001,250,000 MUNICIPAL INFRASTRUCTURE GRANT -MIG GRANT34,265,00041,211,00050,109,000 MUNICIPAL SYSTEMS IMPROVEMENT GRANT750,000790,0001,000,000 REGIONAL BULK INFRASTRUCTURE GRANT5,871,00015,187,0009,813,000 EXPANDED PUBLIC WORKS PROGRAMME4,592,000-- EQUITABLE SHARE ALLOCATION 78,331,000 86,968,000 95,266,000

21 GOVERNMENT GRANTS AND SUBSIDIES The following table and graph show the amounts receivable in terms of contributions from the National & Provincial and Local government, which amounts have been included in the total revenue: BUDGET YEAR 2010/ / /2013 LOCAL GOVERNMENT FINANCIAL MANAGEMENT GRANT1,000,0001,250,000 MUNICIPAL INFRASTRUCTURE GRANT -MIG GRANT34,265,00041,211,00050,109,000 MUNICIPAL SYSTEMS IMPROVEMENT GRANT750,000790,0001,000,000 REGIONAL BULK INFRASTRUCTURE GRANT5,871,00015,187,0009,813,000 EXPANDED PUBLIC WORKS PROGRAMME4,592,000-- EQUITABLE SHARE ALLOCATION 78,331,000 86,968,000 95,266,000

22 CAPITAL EXPENDITURE AND FINANCING The Municipality’s capital expenditure budget for 2010/11 amounts to R45,228,000 million. Due to the fact that the external grant funding is limited, the Municipality has to provide bridging finance for projects from other sources, such as own cash or external loans. DRAFT OPERATING AND CAPITAL BUDGET 2010/ / /2013 CAPITAL BUDGET45,228, ,398, ,922,000.00

23 MUNICIPAL ENTITIES The Legal Division was tasked with investigating the entity and making them compliant with relevant legislation. This brought about difficulties in the accountability of this entity towards the Amajuba District Municipalities. 1.UThukela Water(Pty) Ltd INCOME FROM MUNICIPAL ENTITY Income from the Municipal Entity is recognized on a monthly basis once the income collected on behalf of Municipal Entity has been quantified. The income recognized is in terms of the WSP agreement. BUDGET YEAR 2009/ /2011 % OPERATING INCOME-BILLING FROM WATER SALES 8,171,6207,457,49425% OPERATING EXPENDITURE24,448,55229,659,386100% ADM CONTRIBUTION TO THE WSP 16,276,93222,201,89275%

24 PROPOSED TARIFFS INCREASE ADM has concluded that in order to provide a sustainable service, it is necessary for the WSP to adopt principals of cost-recovery, to charge an affordable fee for water that is used to keep the local infrastructure operational. BUDGET YEAR 2009/ /2011 WATER SALES 8%6% SANITATION AND SEWERAGE 8%10%

25 BUDGET RELATED POLICIES The following polices have been taken into account in the development of the Draft 2010/11 MTREF budget: - Credit Control Policy Budget Policy Supply Chain Management (SCM) Policy Tariff Policy Investment and Cash Management Policy Asset Management Policy

26 RECOMMENDATION It is recommended that: - 1.The annual budget for the financial year 2010/11; and the indicative budget for the two projected outer years 2011/12 and 2012/13 be approved as set out in the following annexure: - (a) Annexure A – National Treasury Tables A1 to A10 (b) Annexure B – Detailed Operating Projects (c) Annexure C – Detailed Capital Projects 2. The 2010/2011 Draft Medium Term Revenue and Expenditure Framework Budget be approved as detailed in the Budget Summary DRAFT OPERATING AND CAPITAL BUDGET INCOMEEXPENDITURE SURPLUS /DEFICIT 2009/ ,922, / ,773, / ,416, / ,382,279 0

27 3. Approval be granted for the increase in tariffs and charges with effect from 1 July 2010 in respect of the following: - (a)Rates and Service Tariffs Sewerage 10% Water 6% 4. That free basic water be granted to a registered indigent of 6Kl per month. ……………………………… DR MS MLANGENI EXECUTIVE MAYOR


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